It’s time to pay the piper for our freewheeling spending of the past decade. Although some scenarios for the future economy provide reason to hope, the recovery is likely to be slow and volatile.
Differences in physical and human capital don’t fully explain the staggering differences in living standards around the globe. The high cost of starting a new business and the difficulties in obtaining financing in some countries also are key factors.
Hybrid adjustable rate mortgages (HARM) were designed to be refinanced by the reset date, when the interest rate would jump. These mortgages worked out well for many people who were credit risks—but only as long as housing prices continued to rise.